Public interest litigation in NSW: recap on costs

• Published date: 05 June 2020
• Author: Ms Katherine Pickerd and Todd Neal
• Subject Matter: Litigation, Mediation & Arbitration, Court Procedure
• Law Firm: Colin Biggers & Paisley

In brief - A summary of the key principles that have developed for costs in public interest litigation in the NSW Land and Environment Court

As we begin a new decade with government and private sector development still required to meet existing and new demand, there will inevitably also be a rise in public interest litigation targeting the perceived environmental and social risks associated with these projects.

Whilst there is a usual expectation in civil litigation for a successful party to be compensated for their costs, this will not always be the case in planning and environmental law cases dealing with the elusive concept of the "public interest".

How costs are treated in public interest litigation is a relevant factor that parties to litigation need to bear in mind at all stages of litigation, but also in project due diligence and planning, since ordinary assumptions about costs in civil litigation may not apply as well as in the delivery phase of a project.

Land and Environment Court

There are many exceptions to the usual rules for costs in the Land and Environment Court. For example:

• Class 1 merit appeal proceedings are a costs neutral jurisdiction, which means that usually each party pays their own costs irrespective of the result.
• In class 3 proceedings, generally an acquiring authority pays an applicant's costs when they challenge the amount of compensation determined by the Valuer-General irrespective of the result.

Public interest litigation in the Court's class 4 jurisdiction is similarly marked by different rules on costs compared to ordinary civil litigation.

General costs rules

Before explaining what the differences are in Land and Environment Court proceedings, it is instructive to firstly explain the general position on costs in litigation. The "ordinary" or "usual" rule for costs in litigation is that costs will follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs (Uniform Civil Procedure Rules 2005 (NSW) (UCPR) rule 42.1).

In determining costs in litigation, the Court has a broad and unfettered discretion, unless a specific statutory provision exists to limit the exercise of that discretion ( see section 98 of the Civil Procedure Act 2005 (NSW)).

In addition to being empowered to order a party to pay costs at the end of proceedings, the Court also has the power to require a litigant to provide such security as the Court thinks fit for the costs of the proceedings before the end of the proceedings (see UCPR rule 42.21). This is commonly known as "security for costs" and is generally required to be paid before the substantive litigation can proceed. That is, the Court has the power to stay the proceedings until suitable security is provided.

Naturally, the possibility that an applicant could be ordered to pay security for costs before the substantive matter is heard and or be ordered to pay the costs of a respondent if the applicant is unsuccessful, can be a significant deterrent to those considering commencing litigation, particularly as the quantum of the security can be substantial.

However, there are circumstances in which the Court will allow an exception to the ordinary rule for costs. Of relevance to this article, in public interest litigation costs are not always awarded against unsuccessful applicants.

Given the large financial risk involved with commencing and defending litigation, it is important to understand the general principles for determining costs in public interest litigation.

For completeness, another form of costs order sometimes applied for are protective costs orders under UCPR rule 42.4. An example where a community organisation has obtained such an order is Nerringillah Community Association Inc v Laundry Number Pty Ltd [2018] NSWLEC 157.

There have also been examples where private companies have sought protective costs orders against community groups joined to proceedings, including the recent example in KEPCO Bylong Australia Pty Ltd v Independent Planning Commission [2020] NSWLEC 38. In that case, due to the facts and circumstances of that matter, Moore J rejected the proposition that there should be some protective costs order made in favour of KEPCO Bylong Australia Pty Ltd.

Open standing provisions and public interest litigation

It is instructive to firstly define what public interest litigation is, and then to explain the open standing provisions that...